Why the three scopes exist at all
If every company simply added up all the emissions connected to its activity, the world's total would be counted several times over. Your electricity supplier would count the gas it burned; you would count the same gas again inside your power bill; your customer would count it a third time inside the price of your product.
The GHG Protocol Corporate Standard solves that by sorting emissions into three buckets according to how close they are to your control. Everyone reports all three, but only Scope 1 and 2 are treated as "yours" for the purpose of avoiding double counting across an economy. Scope 3 is reported separately precisely because it overlaps with somebody else's Scope 1.
Scope 1 — direct emissions
Anything released by equipment you own or control. If it has your name on the lease and it burns something, it is Scope 1.
- Stationary combustion — natural gas or heating oil in your boiler, furnace or process equipment.
- Mobile combustion — diesel and petrol in vehicles you own or lease: delivery vans, the sales fleet, forklifts, site machinery.
- Fugitive emissions — refrigerant escaping from air conditioning, chillers, heat pumps and refrigerated display cases.
- Process emissions — CO₂ released by a chemical reaction rather than by burning fuel. Cement and lime production are the classic cases; most SMEs have none.
The line everybody forgets
Refrigerants. A single air-conditioning service visit topping up 5 kg of R-410A adds about 10 tonnes of CO₂e — because that gas warms the planet roughly 2,088 times as hard as CO₂ does, kilogram for kilogram. For an office-based company that one line can outweigh a year of electricity, and it is the first thing an auditor looks for.
Scope 2 — purchased energy
Energy generated somewhere else and delivered to you: electricity, steam, heat, cooling. You did not burn anything, but your demand caused somebody to.
Location-based and market-based
There are two accepted ways to report Scope 2 and most frameworks want both.
- Location-based uses the average intensity of the grid you are physically plugged into — ECCC's provincial factors in Canada, the EPA's eGRID subregions in the United States, the CEA's national factor in India, the NGA state factors in Australia, the MEE's provincial factors in China. It answers: what did the local system emit to serve this load?
- Market-based uses whatever contract you hold — a green tariff, renewable energy certificates, a power purchase agreement. It answers: what did you pay for?
The two can differ enormously for the same building, which is exactly why both are reported.
Where you plug in matters more than almost anything you do
The same 100,000 kWh, in eight places:
| Grid | kg CO₂e per kWh | 100,000 kWh becomes | Published by |
|---|---|---|---|
| Québec, Canada | 0.0019 | 0.2 t | ECCC |
| Upstate New York, US | 0.110 | 11 t | US EPA eGRID |
| California, US | 0.195 | 20 t | US EPA eGRID |
| United Kingdom | 0.21 | 21 t | DESNZ / DEFRA |
| Guangdong, China | 0.4419* | 44 t | MEE |
| Saskatchewan, Canada | 0.631 | 63 t | ECCC |
| India, national | 0.710 | 71 t | CEA |
| Victoria, Australia | 0.74 | 74 t | DCCEEW |
* China's Ministry of Ecology and Environment publishes CO₂ only, for 2023; the others are CO₂e.
Québec to Victoria is a factor of almost 390, for nothing the company did differently. This is why a single national average is close to meaningless, and why any tool that silently applies one deserves suspicion. ECCC publishes a factor for every Canadian province and territory, the US EPA publishes one for each eGRID subregion, India's Central Electricity Authority updates a national grid factor every year, Australia publishes one per state, and China's Ministry of Ecology and Environment one per province.
The trap a clean grid sets
"Our power is renewable, so we must be fine" is usually wrong. Where electricity contributes almost nothing — Québec, Manitoba, upstate New York — the footprint sits almost entirely in Scope 1, the gas heating the building and the diesel in the vans, and in Scope 3. A clean grid does not shrink your footprint; it moves it somewhere you were not looking.
The mirror image applies on a coal-heavy grid. In much of India, in Saskatchewan or in Victoria, Scope 2 can dominate so completely that efficiency on site outweighs anything in the value chain.
Scope 3 — your value chain
Everything else: emissions you cause but do not control. For most companies this is the majority of the total, often 70 to 90 percent, and it is the part people skip because it looks hard.
The GHG Protocol splits it into fifteen categories. Eight of them are upstream, seven downstream. Few companies have material emissions in all fifteen.
| Category | What it covers | Typical for an SME? |
|---|---|---|
| 1 · Purchased goods & services | Everything you buy to operate or resell | Usually the largest |
| 2 · Capital goods | Machinery, vehicles, buildings you acquire | Occasionally |
| 3 · Fuel & energy activities | Extracting and delivering the fuel you burned | Small but real |
| 4 · Upstream transport | Freight bringing goods to you | Yes |
| 5 · Waste | Landfill, recycling, incineration | Yes |
| 6 · Business travel | Flights, rail, hotels, taxis | Yes |
| 7 · Employee commuting | Staff getting to work, and home working | Yes |
| 8 · Upstream leased assets | Assets you lease but do not control | Sometimes |
| 9 · Downstream transport | Getting your product to the customer | Yes, if you sell goods |
| 10 · Processing of sold products | What your customer does to what you sold | Manufacturers only |
| 11 · Use of sold products | Energy your product consumes in use | Dominant for equipment makers |
| 12 · End-of-life of sold products | Disposal of what you sold | If you sell goods |
| 13 · Downstream leased assets | Assets you own and lease out | Rarely |
| 14 · Franchises | Emissions of your franchisees | Rarely |
| 15 · Investments | Emissions of what you finance | Financial firms |
You are not expected to measure all fifteen in year one. The accepted approach is a screening exercise: estimate each category roughly, find the three or four that dominate, and put your effort there.
Six mistakes small companies make
1. Treating a clean grid as a clean company
Covered above, and worth repeating because it is the most common error anywhere hydro or nuclear dominates. Low Scope 2 does not mean low emissions — it means your emissions are in the other two scopes.
2. Leaving refrigerants out entirely
They arrive as a maintenance invoice, not an energy bill, so nobody thinks of them as emissions. With global warming potentials in the thousands, a few kilograms can outweigh everything else you burned.
3. Putting employee commuting in the wrong scope
Staff driving to work is Scope 3, category 7 — you do not own their cars. Your own delivery van is Scope 1. The same journey in a different vehicle sits in a different scope, and the emission factors differ too.
4. Counting the same energy twice
A monthly meter table and a stated annual total on the same page are almost always the same gas, reported two ways. Adding both roughly doubles your heating footprint. Reconcile them, then use one.
5. Reporting spend when you have quantities
Spend-based factors — kilograms of CO₂e per dollar — are a legitimate fallback and a poor first choice. They cannot tell a wasteful supplier from an efficient one, so your footprint only falls if you spend less. Use physical quantities wherever you have them.
6. Skipping Scope 3 because it is difficult
It is usually most of the total. A rough, clearly-labelled estimate of your biggest categories is far more useful — and far more credible — than a precise number for the 15 percent that was easy to measure.
Where to start
- Pick a year. A full twelve months, usually your last complete financial year.
- Draw a boundary. Which sites and entities are in. Write it down; you will be asked.
- Gather Scope 1 and 2 first. Utility bills, fuel-card statements, HVAC service records. This part is nearly always available.
- Screen Scope 3 roughly. Find the big categories before refining anything.
- Write down every assumption. The number matters less than being able to explain how you got it.
Now put your own numbers through it
Paste your bills, meter readings and invoice notes exactly as they are. The tool sorts them into the three scopes, converts the units and shows every factor it used.
Measure your footprint →Common questions
Is Scope 3 mandatory?
It depends on who is asking. Voluntary reporting under the GHG Protocol asks you to disclose Scope 3 or explain why you have not. Frameworks such as CSRD require it, and large customers increasingly demand it from suppliers regardless of any regulation.
What is Scope 4?
Not an official scope. It is an informal label for avoided emissions — reductions your product causes somewhere else, such as insulation that cuts a building's heating. Useful, frequently overstated, and never netted off your own footprint.
Do I need an auditor?
Not to start. For internal planning, a well-documented screening estimate is enough. For a public claim, a regulatory submission or a customer contract, expect to need third-party verification — and expect the verifier to ask for exactly the assumptions you wrote down.
What is CO₂e?
Carbon dioxide equivalent. Different gases trap heat at different rates, so each is converted into the amount of CO₂ that would cause the same warming over 100 years. Methane is about 28 times CO₂; nitrous oxide about 265; some refrigerants more than 2,000.